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Global X MLPA ETF, MLP ETF

 
The Low-Cost MLP ETF
The Global X MLP ETF offers exposure to the Solactive MLP Composite Index, which is designed to give investors a means of tracking the overall performance of the United States master limited partnerships (MLP) asset class. MLPA is comprised of 30 MLPs engaged in the transportation, storage, processing, refining, marketing, exploration, production and mining of natural resources.
Importance of MLPs
North America's energy supply is constantly being transported, stored and processed to meet growing demand. Energy MLPs are owners and operators of key pieces of infrastructure involved in this supply chain, and as a result may stand to benefit from continued energy use and additional investments in U.S. energy infrastructure.
MLP Asset Class
Due to their unique tax structure and business models, energy MLPs comprise an asset class that offers quarterly income distribution from revenue streams that are linked to domestic energy demand. Some potential benefits of MLPs include:
Historically low correlation with the S&P 500, offering investors the potential for greater portfolio diversification. The Solactive MLP Composite Index has a correlation of 0.63 to the S&P 500 as of July 2013. (INDXX, 2013)
Typically operate a toll-road business model for generating revenues from pipelines and storage, which can create a more stable revenue stream and offer less direct exposure to commodity prices.
Generally pay out much of their operating cash flow in the form of quarterly distributions.
Often have inflation hedges built into their contracts, which can protect revenue streams during periods of higher inflation.
Long-term demand for energy infrastructure is primarily based on the continued use of key energy sources like petroleum and natural gas.
Potential ETF Advantages
No K-1s – 1099 Tax Reporting Only
Quarterly Income Distributions
Open-Ended Fund - No Share Limits
IRA and 401k Eligible
 
 
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DISCLOSURE
Investing involves risk, including the possible loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Investments in securities of MLPs involve risk that differ from investments in common stock including risks related to limited control and limited rights to vote on matters affecting the MLP. MLP common units and other equity securities can be affected by macro-economic and other factors affecting the stock market in general, expectations of interest rates, investor sentiment towards MLPs or the energy sector, changes in a particular issuer’s financial condition, or unfavorable or unanticipated poor performance of a particular issuer (in the case of MLPs, generally measured in terms of distributable cash flow). The fund invests in the energy industry, which entails significant risk and volatility. In addition, the fund is non-diversified which represents a heightened risk to investors. Furthermore, the fund invests in small and mid-capitalization companies, which pose greater risks than large companies.
Due to the nature of the Fund's investments, the Fund will be subject to taxation on its taxable income. The NAV of Shares will also be reduced by the accrual of any deferred tax liabilities.  The Underlying Index however is calculated without any deductions for taxes. As a result, the Fund’s after tax performance could differ significantly from the Underlying Index even if the pretax performance of the Fund and the performance of the Underlying Index are closely correlated.
The Fund is taxed as a regular corporation for federal income tax purposes. The amount of taxes currently paid by the fund will vary depending on the amount of income and gains derived from MLP interests and such taxes will reduce an investor’s return from an investment in the fund. The potential tax benefits from the Fund's investment in MLPs depends largely on the MLPs being treated as partnerships for federal income tax purposes. As a partnership, an MLP has no federal income tax liability at the entity level. Therefore, treatment of one or more MLPs as a corporation for federal income tax purposes could affect the Fund's ability to meet its investment objective and would reduce the amount of cash available to pay or distribute to you. There is no guarantee distributions will be made and dividends may be reduced or eliminated at any time. Furthermore, certain distributions are expected to be treated as a return of capital for tax purposes rather than from net profits and shareholders should not assume that the source of distributions is from the net profits of the fund.
This information is not intended to be individual or personalized investment or tax advice. Please consult a financial advisor or tax professional for more information regarding your tax situation. The fund is required to distribute income and capital gains which may be taxable. Buying and selling shares will result in brokerage commissions and tax consequences. Shares are only available through brokerage accounts which may have minimum requirements. Only whole shares may be purchased.
Carefully consider the Funds’ investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds’ prospectus, which may be obtained by calling 1-888-GX-FUND-1 (1.888.493.8631), or by visiting www.globalxfunds.com. Read the prospectus carefully before investing.
Global X Management Company, LLC serves as an advisor to the Global X Funds. The Funds are distributed by SEI Investments Distribution Co., which is not affiliated with Global X Management Company or any of its affiliates. Solactive Indexes have been licensed by Solactive AG for use by Global X Management Company, LLC. Global X Funds are not sponsored, endorsed, issued, sold, or promoted by Solactive AG nor does this company make any representations regarding the advisability of investing in the Global X Funds.